Main menu

Monthly Archives: August 2014

Post navigation

Nowadays it’s an overused word, you will find corporation speeches using this word 50 times because it shows a dynamic organization that is leading the market. Almost everybody is used to read between lines these corporate speeches, and you can feel that the use of the rhetoric is excessive: “hey guy!, isn’t that an oxymoron?”

Ideas that changes the market, such as accessibility, functionality, price, style, whatever that makes the market to change.

Learn from history is key to understand the importance of innovation, Toynbee’s theories about civilizations describes how civilizations prosper when they effectively motivate their population to creatively contribute to society. When creative capacity dissipates the civilization begins its descents.

Passion for strategy and tactics comes from different origins, some people find it playing chess, some other have a natural talent; in my case the interest comes from the days I played basketball.

Companies are in continuous change, and the way they are re-organized is something it always fascinates me. Business change and that makes that organizations has to adapt to these changes. Sooner or later the way they are organized need a change, and it is here when the re-organization process jump into scene. How to do it?

Business Process Reengineering is the answer for so many of the big corporations, The reengineering revolution (Hammer & Stanton) is the more popular manifesto about it. You will find it implemented through BPM, ERP, Six Sigma…

The day you find people in your company signing their e-mails with names like “BPO”, then you can say that Enterprise Process Solution principles have been implemented.

Techniques, there are different techniques and components that once they are summed, you can calculate the cost of poor quality.

Criteria, it is very important to define the criteria and highlight the arguments that compounds the measure of the COPQ. This calculation generates always controversy because depending of the components used it will point to a group of people more or less as the ones causing the issue (this item is not a cause of poor quality, or yes it is…)

A reference is required in the situations where you are not able to calculate an accurate COPQ. These market references help to do a rough order magnitude estimate. I found this one:

Companies operating at three or four sigma typically spend between 25% and 40% of their revenues fixing problems.

But companies operating at six sigma typically spend less than 5% of their revenues fixing problems.

Value is a perception, your clients see you by the value you provide, not by the amount of hours you work. I’m not inventing the wheel but I have repeated this basic statement more than I thought.

Look at the things you do from the “value” point of view, in short term you will deliver a better work, in long term it will enable you to model a reputation (that is a long term perception).

Concrete the terms on the abstract concept of “value”: when you save your clients time, when you make your clients to earn more money, when you reduce the risk your client faces, when you teach them; you are providing value, your client has a problem and you conduct him to the solution. This perception is built during the journey, once you reach the solution, the journey ends and the experience is evaluated by the customer. It’s About the Journey, not the deliverable.

I have been reading a report from IDC related to the manufacturing industry, and one of the things, I liked was the categorization done based on what it is that drives the cadence of the business and the associated supply chain.

These sub-groups are:

Asset – oriented value chains are characterized by large investments in property, plant, and equipment and are dealing with modest levels of variation in supply, manufacturing, and demand.

Engineering – oriented value chains are characterized by segments that are driven by complex products that have fairly steady demand, but long engineering cycle and order books make it difficult to attenuate demand and supply variation. Product configuration complexity and designed/engineered to order further challenge efficiency.

Technology – oriented value chains have a physical flow of goods that are dictated by the iterating cycles of key underlying technology (e.g., processors) and can have high levels of variation in supply, manufacturing, and demand.

All of them are “cost oriented” segments and it’s basically because cost reduction continuous being the top-rated supply chain priority.

Supply chain organizations can benefit from greater visibility into the cadence of demand.

The problem is that the cadence of the demand is sometimes not clear or you cannot build a demand pattern to take advantage.

By this reason, you can find businesses that defend the idea of using demand signals to run production strategies, and other businesses that act independently of the demand.

Who is right? I do not know.

I assume that forecasts will always be wrong in some % and this implies that some supply flexibility is critical, so invest on the analysis of the forecast gives the supply chain a better chance of responding seamlessly to changes in the business.

In some environments this flexibility exist and it’s used for ensuring and adjusting quality of the products and try to decrease the % of defects.

Supply chain flexibility continues being a daily headache and a dream.